Debit Cards Might Bounce Like Checks

Could a future where your debit card can “bounce” be that far off? That’s what this WSJ article suggests. If so, it would be the result of another creative bit of backlash the banks are mulling in response to the 12 cent debit card fee cap scheduled to go into effect in April. Here’s how it would go down.

Currently, if a debit card transaction is approved by the bank, that means the customer’s money is there in the account and payment is guaranteed. But what if guaranteed payment were “unbundled” and became a service that merchants had to pay extra to have in place?

It’s like the banks are proposing to change debit card transactions into two tiers for merchants. In the more expensive tier, debit cards are treated as they are now. In the cheaper tier, debit cards are treated like checks and would be allowed to “bounce.” The merchant has to writeoff the charge or pursue the customer, and the customer might get charged a penalty fee by their bank.

Since the merchants are the ones who would mainly benefit from the cap on fees that they have to pay per transaction, this would be a backdoor way for banks to recoup some of that lost revenue.

With all the warring over credit and debit cards, cash is looking pretty attractive these days!